What Regulators—and Consumers—Expect from Your Overdraft Service

The conversation around overdraft services is changing—and it’s not just about fees.

Community banks and credit unions are being called to strike a new balance: one that protects revenue while also aligning with regulatory expectations and consumer needs. It’s no small task in today’s climate, where transparency, fairness, and flexibility are in the spotlight.

While recent developments—like the anticipated repeal of the CFPB’s Overdraft Rule targeting very large financial institutions—have eased some immediate regulatory concerns, the broader focus on transparency, fairness, and consumer empowerment continues to grow. Institutions that lead with a consumer-first approach will be better positioned to strengthen relationships and reduce risk, no matter how the regulatory landscape shifts.

Financial institutions relying on outdated overdraft practices or “set it and forget it” strategies may find themselves facing compliance risks, reputational damage, or even lost account holder trust.

Although the CFPB’s Overdraft Rule is likely dead in name and function, monitoring fee practices, transparency, and market expectations is still necessary. Whether your institution made changes in anticipation of the rule, held off to avoid making them twice, or resisted due to revenue concerns, one thing remains clear: having a strong, well-aligned program is still essential.

It’s about building long-term resilience, ensuring regulatory alignment, and improving the experience for your account holders. With the right strategy, it is possible to offer a responsible overdraft service that’s both consumer-friendly and financially sound.

What does that look like in practice?

It starts with:

• Clear, upfront communication about how overdraft services work
• Accessible options that empower consumers to make informed choices
• Ongoing program reviews to ensure your practices align with evolving regulatory expectations and emerging market standards
• Staff training and support to maintain consistency and confidence across your team

We’ve seen firsthand how institutions that embrace these principles not only improve outcomes for their account holders—they also strengthen loyalty, reduce attrition, and build lasting trust in their communities.

Now is the perfect time to take a closer look at your current program and where it’s headed.

If you’re evaluating your current overdraft strategy or wondering what’s on the horizon, check out the webinar “What’s Next for Overdrafts?” now available on-demand. Hear from the ADVANTAGE team as they unpack the latest trends, compliance news, and actionable insights to help you stay ahead and make informed decisions for the future.

Your overdraft strategy plays a powerful role in shaping the account holder experience. As the industry continues to shift, it is the perfect opportunity to ensure your overdraft service supports both your institution’s goals and the needs of your account holders.

Ready to evaluate or enhance your overdraft strategy? Contact us today to schedule a consultation with an ADVANTAGE expert.

About ADVANTAGE
ADVANTAGE, powered by JMFA, is a trusted consulting partner for community banks and credit unions nationwide. We deliver consumer-focused overdraft solutions, compliance expertise, account acquisition strategies, and technology consulting to help institutions strengthen revenue, reduce risk, and grow market share. Learn more at advantage-fi.com.